A tale of two economies

Today’s editorial: The ways that Social Security recipients and Congress get raises need to be reexamined.

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Here’s something magical: Millions of Social Security recipients won’t get a cost of living increase in 2011 because there is no inflation. Congress, on the other hand, is eligible for a pay hike because there has, indeed, been inflation.

You can almost hear the cry of “What gives?” from sea to shining sea.

Oh, there’s an explanation for this. Not just of how Washington works, but of how it doesn’t, too.

The reason for the seeming contradiction is a difference in data. Social Security uses the Consumer Price Index for Urban Wage Earners and Clerical Workers, a common gauge of inflation. Each year, the Social Security Administration looks at the third quarter CPI to determine whether recipients get a raise.

Sometimes that works out even better than expected for recipients. In 2009, they got a relatively whopping 5.8 percent increase because of a brief third quarter spike in energy prices.

Congress’ cost of living adjustments are based on labor costs as measured by the Employment Cost Index. Next year, had lawmakers not voted to reject their raise, their $174,000 salaries would have risen by $1,600. They also rejected a $2,610 raise for this year, after taking $8,800 in raises in 2008 and 2009.

To be sure, there is a logic in using different measures. The gauge for retirees reflects what they buy; the gauge for legislators reflects what working people earn.

Whether Social Security needs another gauge is a fair issue for Congress to discuss — not in the heat of an election but in the context of keeping Social Security viable for future generations. For instance, a proposal to create a special CPI for seniors that gives more weight to prescription drugs, offered last week by Rep. Scott Murphy, sounds more fair but could also send costs soaring. And President Obama’s call for another flat $250 payment next year in lieu of an increase only underscores the need for a system everyone can agree on.

As for Congress, it needs to remember that it’s not just another group of working folks. It’s a body that professes to understand Americans’ needs and share their pain. That’s harder and harder to believe as lawmakers’ pay steadily approaches a level that many consider to be the threshold of the rich when it comes to tax policy.

With millions unemployed and the middle class losing ground for years, Congress’ reliance on a formula that seems to assure it annual raises is self-serving, insular and insulting. And a system that automatically gives lawmakers an increase unless they turn it down only adds to the sense that they don’t quite live in the same world as the rest of us.

At the very least, Congress should have to affirmatively accept its raise, not just get one by doing nothing — a metaphor for bad government if there ever was one.